Dive summary:
- Two researchers at the Federal Reserve Bank of San Francisco are compiling data that support contractors' reasoning that federal spending for highway projects has measurable benefits on the economy of the state to which the money goes.
- In the short term, Sylvain Leduc and Daniel Wilson say, gross state product rises because a project increases demand for services and materials, and that effect is felt well before prices begin to rise in response to increased demand.
- In the medium term, they found, state economic activity increases because of improved infrastructure, and the total effect is a multiplier of at least two dollars of increase for each federal dollar spent.
From the article:
A state government and other important players, such as construction and engineering firms, may decide to spend more today if they expect the state to receive more highway grants in the future. ...
